Tax rates allowances & bands Derby

Income Tax Rates & Allowances

Personal Allowance - The standard Personal Allowance for 2019/20 is £12,500. This is the amount of income you don’t have to pay tax on.

Main Allowances
	2019/20
Personal Allowance* - up to 10% of the PA can be transferred to a spouse or civil partner who is a basic rate taxpayer	£12,500
Blind Person's Allowance	£ 2,450
Dividend Tax Allowance - taxes the first £2,000 at nil	£ 2,000
Personal Savings Allowance - Basic rate taxpayer	£ 1,000
Personal Savings Allowance - Higher rate taxpayer	£ 500

You don’t get a Personal Allowance on taxable income over £125,000.

Income after allowances 2019/20
	Band of taxable income	Rate	Dividend rate
Starting rate for savings	up to £5,000	0%
Basic rate	up to £37,500	20%	7.5%
Higher rate	£37,501 - £150,000	40%	32.5%
Additional rate	Over £150,000	45%	38.1%

Income Tax Rates - applied to the amount of income after deduction of personal allowances.

Married Couple's Allowance - https://www.gov.uk/married-couples-allowance

People born before 6 April 1948 - https://www.gov.uk/income-tax-rates/born-before-6-april-1948

Blind Person's Allowance - https://www.gov.uk/blind-persons-allowance

Capital Gains Tax

Capital Gains Tax (CGT) - is a tax on the profit when you sell (or dispose of) something that has increased in value. You pay CGT on the gain when you dispose of most personal possessions worth £6,000 or more, apart from your car, property that isn’t your main home, your main home if you’ve let it out, used it for business or it’s very large, shares that aren’t in a NISA, ISA or PEP & business assets (but see Entrepreneurs’ relief below).

You don’t usually pay tax on gifts to your husband, wife, civil partner or a charity. You don’t pay capital gains tax on certain assets, including any gains you make from: NISAs, ISAs or PEPs, UK government gilts and Premium Bonds, betting, lottery or pools winnings.

Capital Gains Tax allowances - You only have to pay capital gains tax on your overall gains above your tax-free allowance (called the Annual Exempt Amount). Capital gains tax rates of 10% and 20% introduced for disposals on or after 6 April 2016 do not apply to transactions involving residential property. Capital gains tax rates for these transactions remain at 18% and 28%. An income tax trade loss may be offset against capital gains.

TAX RATES - INDIVIDUALS	2017/18	2018/19	2019/20
Standard rate	10%	10%	10%
Higher rate	20%	20%	20%
Standard rate for gains on residential property	18%	18%	18%
Higher rate for gains on residential property	28%	28%	28%
Annual Exempt Amount
Individuals	£11,300	£11,700	£12,000

Entrepreneurs’ relief (ER) - may be available for certain business disposals taking place on or after 6 April 2008 and has the effect of charging the first £10 million (from 6 April 2011) of gains qualifying for the relief at an effective rate of 10%.

The relief will apply to gains arising on a disposal of:

the whole, or part, of a trading business that is carried on by the individual, either alone or in partnership in the 12 months prior to sale
shares in an unquoted trading company, or holding company of a trading group, provided that the individual owns broadly a 5% shareholding (of the ordinary share capital and voting rights and, from disposals on or after 29 October 2018, to 5% of distributable profits and net assets upon winding up) 12 months prior to sale and has also been an officer or employee of the company in that time
assets used by a business or a company which has ceased within the last three years
assets used in a partnership or by a company but owned by an individual, if the assets disposed of are ‘associated’ with the withdrawal of the individual from participation in the partnership or the company.

From 6 April 2019 the 12 month holding requirements stated above will be increased to 24 months.

A trading business includes professions but only includes a property business if it is a ‘furnished holiday lettings’ business.

Restrictions on obtaining the relief on an ‘associated disposal’ are likely to apply in certain specific situations. This includes the common situation where a property is in personal ownership but is used in an unquoted company or partnership trade in return for a rent. Under ER the availability of relief is restricted where rent is paid.

Business asset rollover relief - You may be able to delay paying Capital Gains Tax if you:

dispose of some business assets
use all or part of the proceeds to buy new assets

Business Asset Rollover Relief means you won’t pay any tax until you sell the new asset. You may then need to pay tax on the gain from the original asset.

You can also claim:

provisional relief if you’re planning to buy new assets with your proceeds but haven’t done yet
relief if you use the proceeds to improve assets you already own

Gift Hold-Over Relief - You may be able to claim Gift Hold-Over Relief if you give away business assets (including certain shares) or sell them for less than they’re worth to help the buyer. Gift Hold-Over Relief means:

you don’t pay Capital Gains Tax when you give away the assets
the person you give them to pays Capital Gains tax (if any is due) when they sell (or ‘dispose of’) them

Tax isn’t usually payable on gifts to your husband, wife, civil partner or a charity.

Eligibility - The conditions for claiming relief depend on whether you’re giving away business assets or shares.

Pensions

In simple terms, a pension scheme is just a type of savings plan with favourable tax treatment.

Pensions set by your employer - also known occupational pensions broadly fall under two main categories, these are: defined benefit pension schemes & defined contribution pension schemes.

Pensions set up by yourself - contract based schemes are provided by insurance companies and other pension providers. They’re effectively a contract between you and the pension provider and include Personal pensions, SIPPs, Stakeholder pensions & Retirement annuities.

How much can I pay into a pension? - If you’re a UK taxpayer, in the tax year 2019-20 the standard rule is that you’ll get tax relief on pension contributions of up to 100% of your earnings or a £40,000 annual allowance, whichever is lower.

For example, if you earn £20,000 but put £25,000 into your pension pot (perhaps by topping up earnings with some savings), you’ll only get tax relief on £20,000.

Similarly, if you earn £60,000 and want to put that amount in your pension scheme in a single year, you’ll normally only get tax relief on £40,000.

Any contributions you make over this limit won’t attract tax relief and will be added to your other income and be subject to Income Tax at the rate(s) that applies to you.

However, you can carry forward unused allowances from the previous three years, as long as you were a member of a pension scheme during those years.

But there is an exception to this standard rule.

If you have a defined contribution pension, and you start to draw money from it, the annual allowance reduces to £4,000 in some situations.

Since April 2016 the annual allowance is also reduced if you have an income of over £150,000, including pension contributions.

Automatic enrolment - since October 2012, Whether you work full time or part time, your employer will have to enrol you in a workplace pension scheme if you:

are not already in a suitable workplace pension scheme
are at least 22 years old, but under State Pension age
earn more than £10,000 a year for the tax year 2019-20.

As long as you meet these criteria you’ll also be covered if you’re on a short-term contract or an agency pays your wages. If you earn less than £10,000, but above £6,136 (for the tax year 2019-20) your employer doesn’t have to automatically enrol you in the scheme. You can still ask to join. Your employer can’t refuse and must make contributions for you.

Accessing your pension - In Budget 2014, George Osborne announced 'pensioners will have complete freedom to draw down as much or as little of their pension pot as they want, anytime they want. Big changes came into effect on 6 April 2015 for those with money purchase pensions.

Inheritance Tax

Inheritance tax is paid if a person’s estate is worth more than £325,000 when they die.

An estate is exempt from IHT if the deceased left everything to their husband, wife or civil partner. Married couples and civil partners can give any value of gifts to each other during their lifetime without IHT being due on them. If someone’s estate is less than the IHT threshold of £325,000, the remaining threshold can be transferred to their husband, wife or civil partner’s estate when they die. This means the surviving partner’s estate can be worth up to £650,000 before any IHT is due. IHT may also be payable on gifts made in an individual's lifetime but within 7 years of death. Transfers of assets into trust made in an individual's lifetime may be subject to an immediate charge at lifetime rates.

Inheritance tax rule changes - In the 2015 Budget, the Chancellor, George Osborne announced a new transferable main residence allowance, which will gradually increase from £100,000 in April 2017 to £175,000 per person by 2020/21. This is in addition to the main nil-rate band. It will effectively raise the IHT-free allowance to £500,000 per person. Where married couples jointly own a family home and want to leave this to their children or grandchildren, the total IHT exemption will be £1m.

Standard nil rate band £325,000
Annual Exemption £3,000
Small Gifts £250
Normal expenditure out of income

Rates of Inheritance tax	%
Lifetime rate	20
Death rate	40
Death rate if >10% charitable legacies made	36

IHT may also be payable on gifts made in an individual's lifetime but within seven years of death.
Years before death	Tax you pay
0-3	40%
3-4	32%
4-5	24%
5-6	16%
6-7	8%

There’s no IHT on a wedding gift worth up to:
Gift from	Amount (£)
Parent	5,000
Grandparent	2,500
Bride/groom	2,500
Other	1,000

Business Relief - allows a business to be passed on by reducing the IHT on it by up to 100%.

Agricultural Relief - allows a working farm to be passed on without paying IHT on it.

National Insurance

National Insurance contributions (NICs) qualify you for certain benefits including the State Pension.

RATES - CLASS 1 EMPLOYER AND EMPLOYEE	2017/18	2018/19	2019/20
Thresholds (per week)
Lower earnings limit (LEL) (employees and employers)	£113	£116	£118
Primary threshold (PT) (employees)	£157	£162	£166
Secondary threshold (ST) (employers)	£157	£162	£166
Upper earnings limit (UEL) (employees only)	£866	£892	£962
Upper secondary threshold (UST) for under 21s (employers)	£866	£892	£962
Apprentice upper secondary threshold (AUST) for under 25s	£866	£892	£962

RATES - CLASS 1 EMPLOYER AND EMPLOYEE
Employee rates
Earnings below LEL	0%	0%	0%
Earnings between LEL and PT	0%	0%	0%
Earnings between PT and UEL	12%	12%	12%
Deferred rate for certain employees with more than one job	2%	2%	2%
Earnings above UEL	2%	2%	2%
Employer rates
Earnings below ST, UST or AUST	0%	0%	0%
Above ST, UST or AUST	13.8%	13.8%	13.8%
Employment allowance (EA) - offset against employer's Class 1 NICs	£3,000	£3,000	£3,000
Class 1A - on employer-provided benefits-in-kind	13.8%	13.8%	13.8%

RATES - OTHER
Class 2 (self-employed flat rate) - per week	£2.85	£2.95	£3.00
Small earnings exception (per year)	£6,025	£6,205	£6,365
Class 3 (entitlement to pension & other benefits) - per week	£14.25	£14.65	£15.00
Class 4 (self-employed) Lower profits limit LPL (per year)	£8,164	£8,424	£8,632
Upper profits limit UPL (per year)	£45,000	£46,350	£50,000
Rate - below LPL	0%	0%	0%
Rate - between LPL and UPL	9%	9%	9%
Rate - above UPL	2%	2%	2%

Statutory Pay

In certain circumstances an employer may be required to make payments to an employee who is not at work. The most common reasons are sickness and maternity.

Statutory Sick Pay - Your employees may be eligible for SSP which is £94.25 a week (2019/20) for up to 28 weeks. You can offer more if you have a company sick pay scheme (you can’t offer less). SSP is paid when the employee is sick for 4 days in a row (including non-working days). You start paying SSP from the fourth day (if they normally work that day).

Maternity pay and leave - When you take time off to have a baby you might be eligible for Statutory Maternity Leave which is 52 weeks and made up of:

Ordinary Maternity Leave - first 26 weeks
Additional Maternity Leave - last 26 weeks

You don’t have to take 52 weeks but you must take 2 weeks of leave after your baby is born.

Statutory Maternity Pay is paid for up to 39 weeks. You get:

90% of your average weekly earnings (before tax) for the first 6 weeks
£148.68 or 90% of your average weekly earnings (whichever is lower) for the next 33 weeks

SMP is paid in the same way as your wages (eg monthly or weekly). Tax and NI will be deducted.

Type	Max period	2019/20 to qualify must earn at least £118/wk
Statutory Sick Pay	28 weeks	£94.25
Statutory Maternity Pay	First six weeks	90% of weekly earnings
	Next 33 weeks	£148.68 or 90% of weekly earnings if lower
Statutory Paternity Pay	1 or 2 weeks	£148.68 or 90% of weekly earnings if lower
Statutory Adoption Pay	First six weeks	90% of weekly earnings
	Next 33 weeks	£148.68 or 90% of weekly earnings if lower
Shared Parental Pay	37 weeks	£148.68 or 90% of weekly earnings if lower

Child Benefit

You’ll usually get Child Benefit for children you’re responsible for, even if you’re not their parent. Only one person can get Child Benefit for each child. There are 2 Child Benefit rates.

Allowance	Weekly rate 2019/20
Eldest or only child	£20.70
Additional children	£13.70 (per child)

Child Benefit stops 31 August on or after your child’s 16th birthday if they leave education or training. It continues if they stay in education or training, but you must tell the Child Benefit Office.

High Income Child Benefit Tax Charge - You may have to pay a tax charge if you have income over £50,000 and you or your partner get Child Benefit. If you’re affected by the tax charge you can choose not to get Child Benefit payments. You can carry on getting Child Benefit and pay any tax charge at the end of each tax year. Register for Self Assessment (if you don’t already fill in a tax return) - so you can send a tax return. Complete the tax return and declare the amount of Child Benefit received for the tax year and pay the tax charge.

What counts as income - To work out if your income is over the threshold, you’ll need to work out your ‘adjusted net income’. Your adjusted net income is your total taxable income before any personal allowances and less certain tax reliefs, such as trading losses, donations to charity made through gift aid and pension contributions.

Vehicles

Car Benefit - The taxable benefit is calculated as a percentage of the list price of the car, on the day before it was first registered. The percentage depends on the rate at which the car emits CO2.

Car Fuel Benefit - Where an employee has the benefit of private fuel for a company car the percentage used to calculate the car benefit is applied to the 'fuel charge multiplier' to work out the assessable benefit. Fuel charge multiplier for 19/20 £24,100 (18/19 £23,400)

Van Benefit - There will be a tax charge for an employee who is provided with a company van that is made available for private use. There is also a tax charge where fuel is provided for private use. Benefit for CO2 emitters 19/20 £3,430 (18/19 £3,350) Fuel benefit 19/20 £655 (18/19 £633)

Vehicle type		Pence per mile
Cars and vans	to 10,000 miles	45p
	over 10,000	25p
Bicycles		20p
Motorcycles		24p

Mileage Allowance Payments - are what an employee can receive from their employer for using their own vehicle for business.

Advisory Fuel Rates - where employers reimburse employees for business travel in a company car. Pence/mile

Engine size	Fuel type	01/12/17	01/03/18	01/06/18	01/09/18
1400 or less	Petrol	11	11	11	12
1400 or less	LPG	7	7	7	7
1600 or less	Diesel	9	9	10	10
1401 to 2000	Petrol	14	14	14	15
1401 to 2000	LPG	9	9	10	10
1601 to 2000	Diesel	11	11	11	12
> 2000	Petrol	21	22	22	22
> 2000	LPG	14	13	14	13
> 2000	Diesel	13	13	13	13

VAT

The standard rate of VAT is 20%. Some things are exempt from VAT, eg. postage stamps, financial and property transactions. The VAT rate businesses charge depends on their goods and services.

RATES AND LIMITS	From 1.4.2017	From 1.4.2018	From 1.4.2019
Standard rate	20%	20%	20%
Reduced rate	5%	5%	5%
Annual registration limit	£85,000	£85,000	£85,000
Annual de-registration limit	£83,000	£83,000	£83,000
Cash & annual accounting turnover limit	£1.35m	£1.35m	£1.35m
Cash & annual accounting - exit turnover	£1.6m	£1.6m	£1.6m
Flat rate schemes - entry turnover limit	£150,000	£150,000	£150,000
Flat rate schemes - exit turnover limit	£230,000	£230,000	£230,000

The VAT registration threshold is been frozen at £85,000 until April 2022.

We offer a comprehensive VAT service including assessing the benefits and disadvantages to your business of being VAT registered, deciding on the most appropriate scheme, attending to VAT registration, VAT returns preparation & dealing with more complex VAT

ISAs

ISAs (Individual Savings Accounts) allow you to earn interest on your savings or investments tax-free. The amount you can put into your ISA is capped for each tax year, for 2018/19 and 2019/20 it’s £20,000. You can choose to split your ISA allowance across different ISAs,.

You can choose from a Cash ISA, Stocks & Shares ISA, Innovative Finance ISA (IFISA), Lifetime ISA (LISA) and Help to Buy ISA. There’s also a Junior ISA to help you save for the kids.

Cash ISA - a Cash ISA works like a savings account, only all the interest you earn is tax-free.
Stocks & Shares ISA - you can also use an ISA to earn tax-free interest on investments.
Innovative Finance ISA - allows you to earn tax-free interest by lending to people or businesses.
Help to buy ISA - a type of Cash ISA made for first-time house buyers. You can save £1,200 in the first month, then £200 per month from then on. When you’re ready to buy your property, the Government will then add 25% as a bonus (up to £3,000). As they are a type of Cash ISA, you can’t pay into both a Cash ISA and a Help to buy ISA in the same tax year. If you’ve opened your Cash ISA this year, you can transfer the funds to your Help to buy ISA. If you have more than £1,200 in there, you can transfer the rest elsewhere.
Lifetime ISA - like the Help to buy ISA, a Lifetime ISA can help you at important life stages. It can also help you buy your first home, or you can keep it open and use it for retirement.
Junior ISA - if your child is under 16, you can open a Junior ISA (JISA) for them instead. They only get an allowance of £4,260 at the moment. You have a choice of Cash or Stocks & Shares, and you can divide the allowance between the two.

Here are a few tips on how to get the maximum benefit from your ISA allowance:

Use it or lose it - Your ISA allowance doesn't roll over to the next tax year
Invest at the start of the tax year (6 April). You'll get more benefit this way
Keep adding to your ISA each year, you get a new allowance each tax year

Corporation Tax

Corporation tax is charged on the profits of companies and unincorporated bodies that are not partnerships, for example members' clubs. The term profits includes all sources of income and capital gains.

A company pays Corporation Tax on the profits it makes from doing business (‘trading profits’), its investments, and selling assets for more than they cost (‘chargeable gains’ – company assets include land and property, equipment and machinery, and company shares).

The rate of corporation tax is fixed by reference to financial years. The financial year commences on 1 April and thus the financial year 2020 is the year commencing on 1 April 2020 etc.

The Corporation Tax rate for company profits is 19 per cent. This is now the standardised rate for all businesses. In 2016-17, the Corporation Tax rate was 20 per cent. Prior to April 2016, the rate depended on how much profit your company made.

Year	Financial Year Commencing 1 April 2017	Financial Year Commencing 1 April 2018	Financial Year Commencing 1 April 2020
Rate	19%	19%	17%

The deadline to pay your Corporation Tax bill is nine months and one day after the end of your accounting period for your previous financial year, so if your accounting period ends on 31 March, your Corporation Tax deadline is 1 January.

Capital Allowances

PLANT AND MACHINERY	2017/18	2018/19	2019/20
AIA of 100% on expenditure up to	£200,000	£200,000	£1m
		£1m from 1/1/2019
Structures and buildings allowance	n/a	2% from 1/1/2019	2%
Main writing down allowance rate	18%	18%	18%
Special rate pool	8%	8%	6%
Energy saving/environmentally beneficial assets	100%	100%	100%
Commercial / industrial building (enterprise zone)	100%	100%	100%
Research and development	100%	100%	100%
MOTOR CARS	2017/18	2018/19	2019/20
Low emission less than or equal to 75g/km	100%
Low emission: less than or equal to 50g/km		100%	100%
Expenditure incurred before 1 April 2018:
Emissions between 75g/km and 130g/km or equal to 130g/km	18%
Emissions greater than 130g/km	8%
Expenditure incurred on or after 1 April 2018:
Emissions between 50g/km and 110g/km or equal to 110g/km		18%	18%
Emissions greater than 110g/km		8%	6%

Stamp Duty & Stamp Duty Land Tax

SDLT is payable in England & NI. It applies to transactions in Wales up to 4 April 2018, from which date the Welsh LTT applies. In Scotland, the LBTT replaced SDLT from April 2015.

Residential property	SDLT rate
Up to £125,000	Zero
The next £125,000 (the portion from £125,001 to £250,000)	2%
The next £675,000 (the portion from £250,001 to £925,000)	5%
The next £575,000 (the portion from £925,001 to £1.5 million)	10%
The remaining amount (the portion above £1.5 million)	12%

Higher rates for additional properties - From 1 April 2016, you’ll usually have to pay 3% on top of the normal SDLT rates if buying a new residential property means you’ll own more than one.

Rates for first time buyers (for properties worth £500,000 or less)
Property value	After 22 November 2017 - on the portion of value above the threshold
£0-£300,000	0%
£300,001-£500,000	5%
£500,000+	Standard rates above apply

Non-residential property from 17 March 2016 - on consideration falling in each band	SDLT rate
Up to £150,000	Zero
£150,001 to £250,000	2%
Over £250,000	5%

Tax when you buy shares - If you buy:

shares electronically (through the CREST system), you’ll pay Stamp Duty Reserve Tax (SDRT
shares using a stock transfer form, you’ll pay Stamp Duty if the transaction is over £1000

The rate in either case is 0.5% of the consideration.

You don’t have to pay tax if you:

are given shares for nothing (including settling a debt)
subscribe to a new issue of shares in a company

Investing in a small business

Enterprise Investment Scheme

The Enterprise Investment Scheme is designed to help smaller, higher-risk companies raise finance and investors can obtain generous income tax and capital gains tax breaks for their investment. The table below sets out the income and capital gains tax reliefs.

Venture capital trusts

VCTs are designed to encourage private individuals to invest in smaller high-risk unquoted trading companies. They can receive income tax relief of 30 per cent of the amount invested, up to £200,000. Dividends paid out of VCTs are tax-free and capital gains are also tax-free.

Seed Enterprise Investment Scheme

A junior version of EIS known as Seed Enterprise Investment Scheme (SEIS) has been introduced - please see table below for differences.

	VCT	EIS	SEIS
Annual investment limit	£200,000	£2 million	£100,000
Income tax relief for subscribers	30%	30%	50%
Clawback if held for less than	5 years	3 years	3 years
Tax free dividends?	Yes	No	No
Tax free capital gains?	Yes	Yes - after 3 years	Yes - after 3 years
Tax relief for losses?	No	Yes - after 3 years	Yes - after 3 years
IHT business property relief?	No	Yes	Yes

TAX RATES, ALLOWANCES & BANDS

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